French and German inflation figures, Canadian GDP, US PCE, US ECI, and US Jobless Claims data are key economic indicators. The European session features Swiss Retail Sales, French CPI, and German inflation, with no expected changes for SNB or ECB. Market bets on a rate cut before year-end are decreasing.
In the American session, Canadian GDP is not expected to impact as the BoC pauses on rate changes. The likelihood of a rate cut by year-end stands at 50%. US PCE price index is forecasted at 2.5% Y/Y, and Core PCE at 2.7% Y/Y; both releases are viewed as predictable given earlier CPI and PPI data.
Us Employment Cost Index And Jobless Claims
The US Employment Cost Index for Q2 is projected at 0.8%, monitored by the Fed for insights on wage growth, though it lags economic developments. US Jobless Claims show a “low firing, low hiring” pattern due to tariff uncertainties. Initial Claims are expected at 224K versus 217K previously, and Continuing Claims are consistent at 1955K. These indicators will affect market expectations and future monetary policy decisions.
With the Federal Reserve holding back on signaling a September rate cut, the coming weeks will be defined by US data. We see the market repricing expectations with every new data point, not waiting for the “totality of the data” that the Fed wants. The focus is squarely on the two Non-Farm Payroll and CPI reports due before the next Fed meeting.
The upcoming US PCE data, expected with a core reading of 2.7%, won’t be a major shock since it’s largely forecasted from prior inflation reports. However, we’ve seen Core PCE remain stubbornly above 2.8% for the first half of 2025, so any deviation from the expected figure will be closely watched. This stickiness is precisely why the Fed is so hesitant to move without overwhelming evidence of a slowdown.
Us Labor Market Data
The US labor market data is where the real tension lies. After a somewhat soft NFP print for June 2025 that came in around 175k, all eyes are on tomorrow’s report and the subsequent one in September. Weekly jobless claims have stayed in a tight range between 215k and 230k for months, supporting the view of a market that isn’t firing but also isn’t hiring aggressively.
Given this heightened uncertainty around the Fed’s next move, derivative traders should be positioned for increased volatility. Strategies like buying straddles or strangles on major indices like the S&P 500 or rate-sensitive ETFs could be effective. These positions profit from a significant market move in either direction following the key US jobs and inflation releases.
Meanwhile, European and Canadian markets offer less immediate opportunity as their central banks appear to be on a more predictable path. We have seen the European Central Bank signal a firm pause after its single rate cut back in March 2025. This makes currency pairs like EUR/USD more of a play on the US dollar’s reaction to its own domestic data.
